From Wikipedia, the free encyclopedia

In professional sports, a free
agent is a player whose contract with a team has expired,
and who's eligible to sign with another franchise. The term came
into wide use in North America after sports leagues stopped using a "reserve clause"
after much acrimonious collective bargaining, which provided a
repetitive option for the club to renew the contract for one more
year, but did not allow the player to terminate the relationship
with the team. The result of the reserve clause was abusive from
the player standpoint so that a player was essentially property of
the team. Once in free agency, a player is in a "pool" of free
agents, from which teams can sign players who are able to drive
hard bargains in the employment market place since the owners now
must compete for their talents. The term is also used, with similar
meaning, in contexts outside of sports; for example, a well known
musician who is no longer
under contract with a major label might be described as a free
agent.[1]

In Europe some countries such as Spain had a system whereby soccer players were
entitled to a free
transfer at the end of their contract. In most countries
however this was not the case until the 1995 Bosman ruling by
the European Court of Justice
which established this right for players in all EU member nations. This ruling
initially only encouraged the transfer of players between clubs and
did not have the same effect as the Seitz ruling in American
sports. Players were still tied to their clubs unless their
contract ran out. The Webster ruling, however, has in theory the
same freedom clauses that will allow players the opportunity to
move between nations, but will not free footballers to move within
the national league they currently play in.

The Bosman
ruling has since been extended to cover other professional
sports and players from Eastern Europe.

Restricted and
unrestricted free agency

Unrestricted free agents (UFAs) are players without a team. They
have either been released from their club, had the term of their
contract expire without a renewal, or were not chosen in league's
draft of
amateur players. These players, generally speaking, are free to
entertain offers from all other teams and to decide with whom to
sign a new contract.

The specific rules of restricted free agency vary among the
major professional sports, but in principle, it means that a player
is free to solicit offers from other teams for new contracts.
However, before this player is allowed to sign with the new club,
the current club has a chance to match (or come within 10% in some
leagues) the terms of the new contract in which case the player
must remain with the original team. In some leagues, when a team
signs a restricted free agent, they must compensate the original
team with draft picks. In certain leagues there is a set date for
which free agents are to begin being signed (NHL).

Undrafted
free agency

Players who are not drafted in a league's annual draft of
amateur players are also considered to be unrestricted free agents
and are free to sign contracts with any team.

Drawbacks
for owners

The economics of free
agency are disadvantageous for team owners; it can lead to bidding
wars -- and increased player salaries mean decreased owner profits.
Restrictions on free agency have therefore been preferred by North
American team owners since the abolition of the reserve clause.
For example, a draft can be used to keep young and talented players
from generating bidding wars, and causing higher player salaries
throughout the league. Furthermore, some teams which play in large
market cities, and hence have a larger revenue stream, would be
able to outbid other teams for talented players. Some leagues, such
as the NFL or NBA have imposed salary
cap rules in order to avert such bidding wars.

In Europe, the wages of the top players have increased
dramatically since the Bosman Ruling, although this is partly due
to increased television revenues. Some club chairmen have called
for a payroll cap in a
bid to control player wages but this would almost certainly be
ruled anti-competitive and therefore illegal under EU law. As in
North America, the number of transfers involving a fee are on the
decline as clubs can now wait for their targets to see out their
contracts and move "on a free".

Deadlines

In some leagues, free agency has deadlines. For example, under
the current NHL Collective
Bargaining Agreement, restricted free agents who do not sign
contracts by December 1 of a given year will be ineligible to play
in the NHL for the balance of that season. However, other leagues
(such as the NBA) have no such
restrictions.

In Europe, players can only move during transfer
windows—during the close season and half-way through the league
season. There are exceptions for unattached (i.e., unemployed)
professional players in the lower divisions.

NFL usage

Unrestricted Free Agents

Unrestricted Free Agents (UFAs) are players who have completed
four or more (six or more in uncapped seasons) accrued seasons of
service and whose contracts have expired. They are free to sign
with any club.

Restricted Free Agents

Restricted Free Agents (RFAs) are players
who have completed three accrued seasons of service and whose
contracts have expired. They have received qualifying offers from
their old clubs and are free to negotiate with any club until April
21, at which time their rights revert to their original club. If a
player accepts an offer from a new club, the old club will have the
right to match the offer and retain the player. If the old club
elects not to match the offer, it may receive draft-choice
compensation depending on the level of the qualifying offer made to
the player.

Exclusive-Rights Free
Agents

Exclusive-Rights Free Agents (ERFAs) are players who have
completed between 0-2 accrued seasons of service whose contracts
have expired. If tendered, they have no negotiating rights with
other clubs and must sign their tender with their old club or sit
out the season.

Undrafted
Free Agents

Undrafted Free Agents (UDFAs) are players eligible for the NFL Draft but who are not
selected; they can join any team willing to sign them, and can
negotiate with any team.

MLB usage

In Major League baseball, free agents are classified as either
type A, type B, or unclassified. Type A free agents are those
determined by the Elias Sports Bureau to be in the
top 20% of all players based on the previous two seasons. Type B
free agents are those in the next 20 percent. Unclassified free
agents are those in the bottom 60%. Teams that lose a type A free
agent receive the top draft pick of the team that signs their free
agent and a supplemental draft pick in the upcoming draft as
compensation. Teams that lose type B free agents receive only a
supplemental pick as compensation. Teams that lose unclassified
free agents do not receive compensation.[2]